Flipkart banks on cardless credit to pip ecomm rivals

Flipkart's new Cardless Credit gives buyers instant credit of up to Rs 60,000

Highlights

Flipkart has added a cardless credit line feature ahead of its annual flagship sales next month.

The credit line will have a limit of Rs 60,000.

Flipkart plans to launch several insurance products over the next six months.

BENGALURU: Online retailer Flipkart has lofty plans for its financial technology business as it looks to battle it out with Amazon Pay and Paytm.

The company has added a cardless credit line feature for customers ahead of its annual flagship sales next month, targeting an estimated 45 million people on its platform not having access to formal credit. The credit line will have a limit of Rs 60,000.

Flipkart also plans to launch several insurance products over the next six months, beginning with ecommerce-related offerings, as well as to revamp its seller financing business. “We want to address the underserved customers and bring financial inclusivity,” said Ravi Garikipati, who heads the fintech division at Flipkart.

“We are also looking at other aspects of the Flipkart marketplace, which will include the seller ecosystem, their working capital and invoice discounting needs. Third aspect would be insurance.” On the consumer side, Flipkart is expecting its financial instruments to encourage significantly higher spending on its ecommerce platform by making it affordable for more people to shop online. The company has already launched a slew of so-called affordability instruments such as no-cost EMI, debit card EMIs, product exchange offers, buy-back guarantees, and a buynow-pay-later feature to make products affordable.

Currently, a mere 3% of the product lines, or stock keeping units, on the online marketplace are purchased through the pay-later option, but Garikipati said it is set to accelerate. “We would like to drive our (gross merchandise value, or gross sales) by15-20% in the next 24 months using our affordability instruments,” said Garikipati. Flipkart’s fintech plan comes a few days after Amazon India filed with the Registrar of Companies expressing its intent to venture into the insurance business. Earlier this year, Paytm, too, ventured into the insurance sector. Flipkart had previously told ET that it would begin with micro-lending and microinsurance for ecommerce purchases, with a long-term plan of moving to products such as general and life insurance.

The company is also looking to co-create new insurance products aligned with ecommerce, such as mobile protection insurance, including theft insurance and damage, and return shipping coverage for sellers.

“The idea is work with insurers and co-create and manufacture products that do not exist in the market. It’s about working with a few strategic partners in the insurance industry,” said Garikipati. Flipkart has said in the past that it is leaning on fintech to drive revenues and profitability.

Experts tracking the fintech space say that while financial products will help ecommerce companies garner a higher wallet share of customers, profitability will depend on how these firms are able to handle claims and customer serviceability.